India’s Sensex Nears Bear Market as Asian Equities Resume Slide

  • Axis Bank climbs after third-quarter earnings beat estimates
  • FII $1.4 billion outflow this month biggest since August

Indian stocks retreated, bringing the benchmark index closer to a bear market, after a rally in Asian equities reversed and crude oil fell.

Maruti Suzuki India Ltd. was the biggest decliner on the S&P BSE Sensex. Tata Motors Ltd., owner of Jaguar Land Rover, slid to a three-month low. Oil & Natural Gas Corp. slumped to its lowest price since May 2009, while Axis Bank Ltd. paced gains among lenders after its third-quarter profit beat estimates.

The Sensex lost 0.4 percent at the close after coming within 0.5 percent of entering a bear market during the day. The gauge fell below 24,000 for the first time since Prime Minister Narendra Modi’s party swept to power on May 16, 2014, as global funds pulled $1.4 billion from local shares this month amid concern about global growth and slumping oil prices. The outflows sent the rupee toward a record low.

“The market can fall a couple of percentage points more because of the global selloff even though there’s no specific problem with India,” Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., which has $6.5 billion in assets, said by phone from Pune, near Mumbai. “The market is approaching a good level to buy.” Reddy said he’s buying banks that lend mostly to companies, and metal producers because they are “attractively valued.”

Earnings Scorecard

Axis Bank said after market hours on Wednesday its third-quarter profit rose 15 percent to 21.8 billion ($321 million), beating the estimated 21 billion rupees. The shares rallied 5.6 percent to pare this month’s loss to 9 percent.

So far, four of the five Sensex companies that have reported earnings for the December quarter have beaten estimates. Fifty-seven percent of Sensex companies in the September quarter posted earnings that matched or beat estimates, versus 60 percent in June, data compiled by Bloomberg show.

“We’re off to a good quarter as far as company earnings are concerned," Sanjeev Prasad, the Singapore-based co-head and senior executive director at Kotak Institutional Equities, said in an interview with Bloomberg TV India on Thursday. “Problem is, valuations are still high compared with other emerging markets.”

The Sensex has declined 19.3 percent from its January 2015 pear, near the 20 percent threshold for a bear market. It is valued at 14.4 times projected 12-months earnings, compared with a multiple of 10.1 for the MSCI Emerging Markets Index.

Maruti tumbled 4.1 percent, extending this year’s loss to 16 percent. Tata Motors slumped 4 percent to its lowest since Oct. 5. ONGC fell 2.8 percent. Dr Reddy’s Laboratories Ltd. retreated 3.9 percent, while Sun Pharmaceutical Industries Ltd. lost 2.5 percent.

Idea Cellular Ltd. decreased 3.1 percent, ending two days of gain. Third-quarter profit fell to 7.64 billion rupees from 7.67 billion rupees a year ago, the company said after market hours. The earnings missed the 7.96 billion rupees estimated by analysts.

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